View more on these topics

Keith Richards: The win-win of social impact investing

We were proud to publish a good practice guide on social impact investing last month as part of an initiative started by an independent advisory group chaired by Allianz Global Investors vice chair Elizabeth Corley. The group had been set up by the Department of Digital, Culture, Media and Sport to increase choice in this market and broaden sources of funding.

When ethical investing first began back in the 1970s, the assumption was that, in order to invest in companies that behaved well, investors had to accept lower returns.

Over time, this assumption has been challenged. Why should businesses that go with the grain of wider social and environmental progress not be at least as successful as others?

There is a logical case for saying that firms more engaged in changes in society should be better able to adapt to the evolving demands of consumers. Certainly, we see firms thrive when they adopt an ethical culture and go the extra mile to engage with their local community. They tell me they see far greater success than they would had they just done the bare minimum to comply with the regulations of the day.

And it seems a growing number of consumers agree. A 2015 survey conducted by Barclays found more than half of investors expressed an interest in social impact investments.

One of the challenges associated with social impact investing is that, as everyone is different, the kind of impact they want to make is different. Some might want to focus on firms specialising in rehabilitating people with mental illnesses; others may be more inclined to screen out those that have a detrimental impact on the environment.

The guide points advisers to tools that can help them structure conversions with clients and take stock of the kinds of funds available in this part of the market.

Another factor that may have held advisers back is the myth that the regulator has a negative view of the market because of preconceived ideas about the cost or liquidity of it.

But the FCA has said clients’ objectives will be individual and should be explored and considered by advisers, regardless of whether they are financial or non-financial goals. Meanwhile, the Financial Ombudsman Service remains committed to working with the FCA as it develops any rules and guidance in this area and continues to support the work of its Advice Unit and Project Innovate, which seek to assist firms considering new business or advice models.

We all agree that the most important job for advisers is to make suitable recommendations for their clients and no one is saying to compromise that to promote social impact investing.

However, advisers now have the chance to make even more relevant and appropriate recommendations with the help of guides and tools provided across the industry, creating wins for clients, our profession and our wider communities.

Keith Richards is chief executive of the Personal Finance Society



Steve Bee: Employers tied in knots by red tape on pensions

Many of my friends are ex-teachers, having retired from the profession. We were recently talking about how valuable the teachers’ pension scheme has been to them in building a decent amount to retire on and bemoaning the fact the next generations are unlikely to have such benefits provided through the generosity of their employers. Our […]

File images of financial data around the earth

400 Cofunds clients locked out of new platform website

Hundreds of Cofunds’ advised clients have been locked out of their accounts after being moved to the new Aegon platform over the first May bank holiday weekend, the provider has confirmed. In a statement, Aegon says there are around 400 advised clients who can’t access their account through the website. However, they can get access by […]


Fixed income outlook 2018

With much speculation about the challenges faced by bond investors in 2018, RLAM’s Head of Fixed Income, Jonathan Platt offers his outlook for all areas of the fixed income market in our brief video. Watch the video here: Past performance is not a guide to future performance. The value of investments and the income from […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment